How are Unsold Shares in an Auction Handled? In What Cases Do Investors Not Receive Their Auction Deposit Back?
How much deposit do investors need to pay when registering to participate in a share auction?
According to the regulations at Clause 3, Article 8 and Clause 2, Article 12 of the Regulations issued with Circular 32/2021/TT-BTC regarding this content, as follows:
Responsibilities and authority of investors participating in auctions
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3. Submit a deposit of 10% of the total value of the registered shares calculated at the starting price;
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Registration procedures for participating in auctions and submitting deposits
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2. Submitting deposits:
a) Investors must submit a deposit of 10% of the total value of the registered shares calculated at the starting price in Vietnamese Dong to the Auction Agent's account before ... hour ... minute ... day ... month ... year ... (at least 05 business days before the auction date);
The exchange rate used to calculate the deposit, security deposit in foreign currency for foreign investors is the buying rate of the commercial bank where the Organizing Entity opens the foreign currency account and on the day the investor submits the deposit, security deposit;
b) Deposits do not accrue interest.
Thus, investors must submit an amount equal to 10% of the total value of the registered shares calculated at the starting price to proceed with the deposit for participating in the share auction.
How are unsold shares in an auction handled? In which cases will investors not receive back their auction deposit? (Image from the internet)
Is the deposit of investors participating in the auction refundable?
According to the regulations at Article 21 of the Regulations issued with Circular 32/2021/TT-BTC regarding the handling of the deposit of foreign investors participating in share auctions as follows:
- The organization conducting the share auction must return the deposit to qualified investors who did not win the purchase of shares to the Auction Agent within three (03) business days from the date of announcement of the auction results.
- The Auction Agent is responsible for transferring the deposit to the qualified investors who did not win the purchase of shares within five (05) business days from the date of announcement of the auction results.
- Foreign investors who deposit or provide a security deposit in foreign currency will be reimbursed in foreign currency;
- For investors who win the auction, the deposit is handled according to Clause 2, Article 18 of these Regulations. If the auction deposit exceeds the payment for the shares won in the auction, investors must send a document to the Auction Agent before the payment deadline for purchasing the shares if they wish to decline purchasing the shares.
- For deposits not refundable due to investor violations of auction regulations per Clause 1, Article 19 of these Regulations, the organization conducting the share auction must transfer the funds according to Clause 1, Article 11 of Circular 32/2021/TT-BTC.
Thus, in the case where an investor participates in the auction legally but does not win the purchase of shares, the organization conducting the share auction will return the deposit to the Auction Agent, who will subsequently return the deposit to the investor.
In which cases will investors not receive back their auction deposit?
According to the regulations at Article 19 of the Regulations issued with Circular 32/2021/TT-BTC, instances of violating auction rules where investors will not receive their deposit back include:
- Not submitting the Auction Participation Form;
- The Auction Participation Form is invalid according to Clause 1, Article 13 of the Regulations issued with Circular 32/2021/TT-BTC;
- Not stating the price and/or volume on the Auction Participation Form;
- Registering but not placing a bid (either in full or partially), the investor will not receive back the deposit corresponding to the number of shares not bid on;
- Bidding below the starting price;
- Failing to pay in full or a portion of the shares they are entitled to according to the auction results, the investor will not receive back the corresponding deposit for the shares they declined to purchase. In case the investor only pays a portion, their winning shares will be evaluated by the Share Auction Council based on the order from the highest to lowest bid prices of that investor.
The Share Auction Council will be responsible for reviewing and handling violations based on the severity of the violation.
How are unsold shares in an auction handled?
According to the regulations at Article 20 of the Regulations issued with Circular 32/2021/TT-BTC regarding this content as follows:
- In the case where the total number of shares offered in the public auction is not sold out:
Within three (03) business days from the deadline for payment of shares purchased, based on the number of unsold shares, the organization conducting the share auction will notify the Equitization Steering Committee to handle according to the regulations at Clause 19, Article 1 of Decree 140/2020/ND-CP and Clause 4, Article 8 of Circular 32/2021/TT-BTC.
- In the case where the share auction is unsuccessful:
Within three (03) business days from the date of determining that the share auction is unsuccessful, the organization conducting the share auction will notify the Equitization Steering Committee and the equitizing enterprise about the unsuccessful auction to handle according to the regulations at Clause 6, Article 6 of Circular 32/2021/TT-BTC.
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